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Strategy Briefing

Global Tobacco: Key Findings Part I - Cigarettes

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2016 saw a continuing uprooting of the received wisdom about the world’s largest cigarette market, China, as its volume decline amplified to record levels in modern history. Ongoing decline continued in other regions with some major markets in the Middle East and Africa and Asia Pacific the only ones to see volume growth. Increasingly, focus is turning to alternative products, particularly the growth of heated tobacco which promises a longer-term future for the industry.

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Cigarettes volume -3.2%

As the Chinese market deteriorated further, 2016 volume performance was worse again than 2015’s relatively poor showing. Such is China’s huge impact that the volume decrease, excluding China, at 1.4%, was an improvement on last year’s 1.8% decline as stability in some major markets and growth in parts of AP and MEA boosted volumes.

Average pack price +2.4%

Average pack price growth moderated in 2016 with the global average up 2.4% to reach USD2.48 (USD3.02 excluding China). All regions saw growth, led by Australasia and Eastern Europe, but rates of increase in Western Europe, the Middle East and Africa and China dragged significantly with all seeing growth of less than 1.5%.

Cigarettes value +1.8%

Substantial declines in China, weighed heavily on global cigarette value growth in 2016, recording, at 1.8%, the lowest rate of value growth in at least two decades. Excluding China however, progress on value was a more robust 4.4%. All regions outside Asia Pacific saw growth with the Middle East and Africa, Latin America and Eastern Europe in double digits.

Illicit trade volume -0.3%

The total volume of illicit cigarettes consumed in 2016 remained flat as continuing reductions in China aligned with lower demand in Western Europe. However, excluding China volumes grew 2% in 2016, driven in particular by the remainder of Asia Pacific, and Eastern Europe as total penetration rose slightly 10.6%.

Heated tobacco products value +189.2%

2016 was a year that underlined the potential of heated tobacco products to offer the industry a medium to longer term future away from combustible products. As yet, Japan remains the clear success story with respect to adoption of the product (forecast to reach 22% by 2021) but the industry claims promising (albeit slower growth) in a number of other international markets.